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Loan Products |
>> Reverse Mortgages |
A Reverse Mortgage is a special type of home equity loan that allows seniors to convert some of the equity in their homes into cash while still retaining home ownership.
 Reverse mortgages work much like traditional mortgages with one important exception: instead of you making a mortgage payment each month, the lender pays you.
Unlike conventional home equity loans, most reverse mortgages do not require any repayment of principal, interest, or servicing fees for as long as you live in your home. Funds obtained from these loans may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel, and maintenance costs.
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What is a Reverse Mortgage?
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A Reverse Mortgage is a US Government backed loan that allows seniors to convert some of the equity in their homes into cash while still retaining home ownership.
Reverse mortgages work very much like traditional mortgages with one important exception:
You dont make a mortgage payment each month ~ Instead the Lender pays you.
Funds obtained from these loans may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel, and maintenance costs.
Most reverse mortgages do not require any repayment of principal, interest, or servicing fees for as long as you live in your home.
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Are Reverse Mortgages Safe?
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FHA and FANNIEMAE guarantee the payments are made to you each and every month.
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You can stay in the home as long as you want.
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You will never owe more than the house is worth.
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Since there is no mortgage payment to make, you cannot lose your home for "missing a payment".
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Consumer education is provided by a third party non-profit or public agency.
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How Does a Reverse Mortgage Work?
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HUD reverse mortgage do not require repayment as long as the borrower lives in the home. The loan is repaid when the home is sold. Any remaining proceeds from the sale of the home are returned to the homeowner or to the survivors.
If the sales proceeds are insufficient to pay the loan balance, HUD will cover the shortfall with no further obligation from the borrower.
Homeowners can choose to receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit. Homeowners whose circumstances change can restructure their payment options.
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What's the Difference between a Bank Equity Loan and a Reverse Mortgage?
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With a traditional second mortgage, or a home equity line of credit, you must have sufficient income to qualify for the loan, and you are required to make monthly mortgage payments.
A reverse mortgage works very differently. The reverse mortgage pays you, and it is available regardless of your current income. You don't make payments, because the loan is not due as long as the house is your principal residence.
Of course you still are required to pay your real estate taxes and other payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed on or forced to vacate your house because you "missed your mortgage payment."
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What Are the Costs Involved?
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The costs associated with getting a reverse mortgage include the origination fee (which can usually be financed as part of the mortgage), an appraisal fee, and other charges similar to those for regular mortgages.
The money provided to you from a reverse mortgage is tax-free; it is not income that you must pay taxes on.
Reverse mortgage programs also collect funds from insurance premiums charged to borrowers. Senior citizens are charged 2 percent of the home's value as an up-front payment plus one-half percent on the loan balance each year. These amounts are usually paid by the lender and charged to the borrower's principal balance.
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Am I Qualified?
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Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to participate in a reverse mortgage program.
There are no asset or income limitations on borrowers to receive a reverse mortgage.
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Government benefit such as SS, SSI, Medicare and Medicaid remain available to you.
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Current income and past credit problems are not considered.
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How Much Can I Borrow?
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The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed.
There are no limits on the value of homes qualifying for a reverse mortgage. However, the amount that may be borrowed is capped by the maximum FHA mortgage limit for the area.
You can choose how to receive the money from a reverse mortgage. The options are: all at once (lump sum); fixed monthly payments (for up to life); a line of credit; or a combination of a line of credit and monthly payments.
The most popular option – chosen by more than 60 percent of borrowers – is the line of credit, which allows you to draw on the loan proceeds at any time.
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How Do I get started?
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Call us at 1-510-895-5969 to schedule an interview. We will ask you some basic questions to determine which programs are available to you.
If you wish to proceed after this short interview, we will arrange a free session with a HUD (U.S. Housing and Urban Development) approved counselor. Counseling will include benefits available, program details, resource material and whether a reverse mortgage is right for you.
The counselor is a third party acting on your behalf, not ours. You are encouraged to have family, legal or other representation attend the counseling session with you.
After the counseling session, if you wish to apply for a reverse mortgage, call us for an appointment to start the application. It will take from six to eight weeks to complete the entire process.
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